Bank of Canada Governor Tiff Macklem is sending a clear message: the uncertainty around US trade policy isn’t just a temporary headache. It’s becoming a structural feature of the Canadian economic landscape, and traditional monetary policy tools can only do so much about it.
Macklem’s latest remarks underscore that even with the USMCA technically still in place, the mere review process and the broader tariff environment emanating from Washington have been enough to freeze business investment and drag exports to levels not seen in nearly a century.
The numbers tell a grim story
The Canadian economy is now operating in what the Bank of Canada describes as excess supply.
Unemployment climbed to 7.1%, reflecting real pain in sectors most exposed to tariff burdens. Production declines in those industries aren’t theoretical. They’re showing up in payroll data.
